(FORTUNE Magazine) – IN ONE CORNER of Donald P. Kelly's Chicago office hang 11 plaques, each engraved with the particulars of the billion-dollar deal it commemorates. Kelly, 66, is immensely proud of himself. He did the first of his big deals in 1980, when as CEO of Esmark he sold the company's energy subsidiary shortly before oil prices peaked. Four years later he sold Esmark to Beatrice for $2.7 billion. In 1986 he teamed with Kohlberg Kravis Roberts & Co. (see preceding article) to capture a reluctant Beatrice, the food and consumer products conglomerate. KKR is the partnership's financier, and Kelly is the executive who manages Beatrice's diverse portfolio. He has been steadily dismantling Beatrice, selling off assets worth $6.9 billion. Last year a Beatrice spinoff he headed launched a raid on American Brands, threatening a proxy fight before eventually agreeing to be acquired -- at a profit -- by the giant tobacco company. Little about Kelly seems designed to impress. Despite a net worth of more than $100 million, he has none of the trappings of big money. He still hangs out with old pals and loves telling a joke on the ''fat, dumb, red-faced Irishman'' he calls himself. Associate editor Ford Worthy talked with Kelly about his youth on the South Side of Chicago; his rise through Swift, the meatpacker that became EsSmark; and his relationship with KKR.

''You can't do $6.9 billion in transactions, and affect the lives of as many people as we've affected, without having some differences of opinion. Soon after we bought Beatrice, a couple of the lesser lights in KKR's hierarchy came out to our offices in Chicago. When I realized they were here, I asked them to come see me. 'I would not think of coming to see you without at least letting Henry Kravis know I was in your offices,' I told them. 'I would expect that you would have the same relationship with me.' They said, 'Well, we were just trying . . .' I said, 'I didn't ask what you were trying to do. I said that when you're in this office I expect you to let me know that you're here. There is nothing that we're doing that you won't have complete access to. And there isn't a day my resignation isn't available. But there is never a day that you're going to be allowed to do anything in this company of substance. And if you don't like it, I suggest you go back to New York, and talk with Mr. Kravis and Mr. Roberts and Mr. Kohlberg and determine whether or not we will continue our relationship.' I am sure that that established turf. Our relationship with KKR today is stronger and better than it's ever been. We've been through differences of opinion, differences of approach. But we have always been able to resolve them and move on to the next matter. Ultimately, if KKR decides we're going to go down Road A, that's the way we're going. They're the owners. The question is, 'Who's going to be on the bus?' It might be a bus with one less person on it. But I don't see that happening. I was born in a middle-class area on the South Side. We lived in St. Kilian's Parish, a predominantly Irish Catholic neighborhood that had more failures than successes. During the Depression my father, who was an accountant, lost his job when the steel company he worked for got into deep trouble. But my youth was inordinately happy. Regardless of what financial position my father might have found himself in, there were always laughs around our house. My father was not a disciplinarian. He was much easier going than I am. I was like my mother, a little more aggressive. When we were kids, the best thing that could happen was for her to say, 'I've had it with you. I'm going to let your father handle this.' Learning always came very easy to me, but I was a terrible student. I would get bored, and I was a wise guy. You get a bored wise guy and you're not going to have much of a student, which I was not. My mother was constantly having to have guidance sessions with me. I SPENT MY TIME at the police station with the rest of the guys, but never got in any serious trouble. A number of the people I was raised with ended up not turning out very well. Some were killed; some were put in jail. It was not a Boy Scout neighborhood. I started work on a regular basis at a gas station when I was 12 or 13 years old. Summers, I would work all night. Mr. Jones, who ran the numbers racket, used to stop in every night with his three Cadillacs and bodyguards. He had a little vase on the side of his car with roses in it, and every night he would give me a rose for my mother. One night I was robbed. He came in and said, 'What did you lose?' I told him I lost my coin changer, and some money. 'And the man,' he said. 'Can you describe the man?' I told him about the man. The next night he drove in, handed me the changer, handed me the money, and said, 'You will not be bothered by him again.' I said, 'Thank you, Mr. Jones.' I left home when I was 17. My folks had wanted me to go to college, but I didn't think I needed to. My older brother was at Northwestern University at the time. He went to work for Standard Oil Co. of Indiana. My younger brother later graduated magna cum laude from Loyola. I bummed around. I worked in construction jobs in Texarkana, Texas, and St. Paul, Minnesota. At one point I worked up in Superior, Wisconsin, selling shirts in Gately's Credit Clothing store, just about broke. In 1940 my dad got me a job as a labor and materials checker for the Naval Cost Inspection Service in Chicago. My job was to determine whether the government was being properly charged on military contracts. I spent a lot of time in companies' IBM tab departments checking on how they were allocating labor costs. That was my first exposure to IBM. THE NAVY called me in 1942. I served as a torpedoman on destroyers and destroyer escorts in the Atlantic and the Pacific. I boxed while I was in the Navy. They called me Canvasback Kelly: I'd get the crap kicked out of me and / then get up and go back at it again. I was a tough kid. I ended up at a naval base near Manila, where I played football well enough to get a recommendation from the coach. I tried to get into Notre Dame. Most of the players on the team I wanted to be a part of ended up as All-Pros. It should have been obvious to me that I was not going to get into Notre Dame. I couldn't have made the fifth team. But I really thought I had a chance. Even after they said there wasn't any way I could get a scholarship, I still thought maybe I could. So I carried steel rail and worked out all summer long hoping they would suddenly see the light, that God would become just. But it didn't work out that way. So I decided to go to Wilson Junior College and build up some credits. One night at a bar I bet some guys $100 -- which in those days was an unbelievable amount -- that I could get straight A's. One semester I got straight A's, and immediately got bored. To help support myself during college, I worked part time for United Insurance Co. of America. Late one night I was doing some work there when the chief financial officer walked by holding some punch cards. 'Look at this crap they're putting in,' he said. I said, 'It's an IBM card.' He said, 'I know it's an IBM card. But look at all these holes.' I said, 'Well, I can read that. See, this says 1 -- 2